New TVA board members face critics in Chattanooga

TVA recently purchased two new Cessna mid-sized jets, which it said are safer than its previous turbo-prop aircraft. Environmental group representative Stephen Smith, who is also a pilot, said he doesn't believe the jets are any safer than turbo-props.(Photo: Southern Alliance for Clean Energy)

The Tennessee Valley Authority board conducted little business Friday, but got an earful of criticism during a public “listening session” in Chattanooga.

A persistent complaint was a lack of transparency from the agency on how it calculates power rates, particularly for residential customers. Numerous Memphis residents said they have received recent monthly bills for $800 or more, and can’t get explanations of why their bills suddenly jumped.

Sandra Upchurch of the Tennessee NAACP said the problem would exacerbated by proposals to establish mandatory “grid access” fees on individual ratepayers, while large industrial customers pay lower rates for power.

“You want us to pay for your mistakes, your poor planning, and overbuilding your gas plant in Memphis,” Upchurch said. Energy surveys estimate some Memphians pay between 13 and 25 percent of their annual income for power. The city has the largest energy burden in the United States.

Many commenters on residential rates mentioned recent news that TVA bought two corporate jets and a luxury helicopter — the latter previously owned by Dallas Cowboys owner Jerry Jones — for $28.85 million. The aircraft cost $40 million new and activists frequently referred to that figure instead of their actual price. Public speakers also decried TVA President and CEO Bill Johnson’s $6.5 million compensation package. That makes him the highest-paid federal employee in the country, but the agency says that is below-average pay for a comparable utility industry CEO.

The first-quarter board meeting in the Missionary Ridge Auditorium of the Chattanooga Office Complex lasted less than 45 minutes, but at the preceding listening session dozens of speakers took up more than three hours, given three minutes each. Both were broadcast live online.

It was the first full meeting for four new board members, appointed by President Donald Trump: Oak Ridge National Laboratory's operations deputy Jeff Smith; retired Kentucky coal executive Kenny Allen; James “Skip” Thompson, a banking executive from Alabama; and A.D. Frazier, of Georgia, president of an investment and acquisition firm. One seat on the nine-member board remains open.

TVA executives didn’t respond during the listening session, but afterward Board Chairman Richard Howorth, President and CEO Bill Johnson, and other TVA executives offered a defense.

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The TVA headquarters in downtown Knoxville is pictured in January 2015.(Photo: Michael Patrick / News Sentinel)

Howorth said flying is often the most efficient way for TVA officials to travel in their 18,000-square-mile territory. Many places they visit for inspection and “economic development” don’t have commercial air service, executives said.

Johnson said the used helicopter came with its luxury features, including a Mercedes logo on the seats, and that it was cheaper to keep that than replace them. He credited the helicopter with a “key role” in the recent Toyota-Mazda announcement of 4,000 jobs coming to north Alabama.

Howorth defended Johnson’s compensation, saying it reflected the board’s pleasure with his performance; and that he knows Johnson “cares deeply” for ratepayers.

Johnson said Memphis has among the lowest power rates in the country, and blamed skyrocketing electric bills on a spate of cold weather.

“The bill is higher because you’ve used a lot more energy,” he said.

Howorth said the board will consider all comments, and blamed the distress many speakers displayed on “incomplete information.”

Johnson also denied that TVA conspires to unfairly favor its industrial customers.

“That, of course, is completely untrue, false and baseless,” he said.

It is true, however, that big customers pay less than small users, Johnson said.

Richard Howorth(Photo: TVA.gov)

“Across the country, industrial rates are generally half of residential rates,” he said. That’s because big industries cost less to service, tapping directly into TVA’s high-volume lines instead of buying secondhand through local utilities and parceling power out on thousands of smaller individual lines; and because industrial use is far more consistent than residential demand, resulting in lower generation cost, Johnson said.

The difference in TVA’s prices for industrial vs. residential customers is about even with the national average, he said.

Another bone of contention is a TVA proposal to change its rate structure, moving about $1.4 billion over five years to a fixed “grid access fee.”

Debbie Dooley of Georgia, president of Conservatives for Energy Freedom, said she wanted Johnson removed and was “appalled” at the purchase of luxury aircraft while the agency asked ratepayers for more.

“Surely you understand the appearance of that,” she said. Her group’s partnership with the NAACP showed concern about the issue “is not about left or right, it is about right and wrong,” Dooley said.

Johnson said the change is revenue neutral, and postulated that many low-income residential customers would see their bills go down – a claim rejected by the opposing groups on Friday, which say fixed access fees disproportionately hurt the low-income. TVA is expected to vote on the proposal in May.